Singapore's Finance Minister Tharman Shanmugaratnam unveiled measures to reduce the reliance on foreign workers and to provide better living standards for older and weaker sections of the society.
"Our mission is to build an inclusive society and a stronger Singapore," Tharman, who is also the Deputy Prime Minister, said in his 2012 Budget Speech on Friday.
The minister said the nation has to reduce dependence on foreign Labour, and do much more to build an economy driven by higher skills, innovation and productivity, as the basis for achieving higher incomes for Singaporeans.
To reduce the level of foreign employees, the government will lower the Dependency Ratio Ceilings (DRC) in the manufacturing to 60 percent from 65 percent and to 45 percent from 50 percent in services, from July 1, 2012. The DRCs specify the maximum proportion of foreign workers that companies can hire.
About 500 manufacturing companies and 8,500 services companies will be affected by lower ceiling. He plans to consider further increases in the foreign worker levy beyond July 2013, depending on the growth of the foreign workforce in the next twelve months.
Nonetheless, sectors like construction will require more foreign workers over the coming five years, given major housing and public transport projects. The government plans to further reduce the Man-Year Entitlement quotas by 5 percent in July 2012, and raise levies for basic skilled workers hired outside the quotas.
For small and medium enterprises, Tharman rolled out a new Special Employment Credit (SEC). According to the facility, all employers will get a credit for their Singaporean workers who are above 50 years old and earnings up to S$3000 per month. The credit for the employer will be 8 percent of wages.
In addition to SEC, the government will provide a one-off cash grant to help companies offset higher business costs.
The government will increase the Central Provident Fund (CPF) contribution rates for three groups of Singaporeans, starting with people aged above 50. The contribution rates of workers were raised between 0.5 percent and 2.5 percent.
Moreover, the government will raise the income tax relief for older taxpayers. Also, the Earned Income Relief is doubled for those aged 55 and above.
With an intention to unlock significant wealth held by elderly generation at their homes, the government will introduce a Silver Housing Bonus of S$20,000. Under this scheme, older Singaporeans who wish to sell their existing flats and purchase 3-room or smaller HDB flats, will receive bonus.
To help lower-income Singaporeans, the government will introduce a permanent GST Voucher. This voucher will fully offset the 7 percent GST that the lower half of retiree households pay on their expenses.
The government also plans to double its yearly healthcare expenditure to about $8 billion over the next five years. To ramp up bus capacity and improve public transport system, the government set aside S$1.1 billion in this budget for a Bus Services Enhancement Fund.
Further, the investment-grade gold and other precious metals that are financial assets were exempted from GST. The government will further raise the excise duties for beedies cigarettes and smokeless tobacco by 20 percent, and un-manufactured tobacco by 10 percent.
The finance minister said if the economy succeed in achieving productivity growth of 2 percent to 3 percent per year over this decade, Singapore should be able to sustain economic growth at 3 percent to 5 percent.
For fiscal year 2012, he expects a small basic surplus of S$1.3 billion, which is close to a balanced budget at 0.4 percent of GDP.
by RTT Staff Writer
For comments and feedback: editorial@rttnews.com
Economic News